NTRPDC holds natural gas summit meeting

Maureen Ball of Inergy Midstream LLC speaks during the meeting. “Just last year in Pennsylvania, because of our projects, Inergy utilized over 250 Pennsylvania contractors, consultants and vendors, and we spent over $20 million last year utilizing these companies,” she said.

For the third year, the Northern Tier Regional Planning and Development Commission (NTRPDC) held its annual natural gas summit meeting for municipal officials on Nov. 14 at the Wysox Fire Hall. The primary focus of the summit was to help officials gain information on the funding and usage of Act 13, more recognizably known as the “impact fee,” which was signed into law on Feb. 14. Another key focus of the summit was the presentations by potential natural gas suppliers, namely Inergy Midstream’s efforts in Bradford County and Leatherstocking Gas Company’s efforts in Susquehanna County, in their interest in providing local natural gas to local consumers.

“One of our biggest goals is to provide information to municipal officials about natural gas in the area,” NTRPDC Director Kevin Abrams said. “For the suppliers’ presentations, we targeted areas that are not serviced by natural gas to help them gain an understanding of it.”

Providing an overview of the impact fee was Karen Oill Moury, director of regulatory operations for the Pennsylvania Public Utility Commission (PUC).

Moury explained that the PUC’s responsibilities in relation to the impact fee included collecting the fee from natural gas producers and then disbursing the fees to the state and local government.

“We had to collect the fees from the producers by Sept. 1 of this year, and in every year going forward the fees will be collected by April 1,” she said. “Then, we need to disburse those fees to the state and local government by Dec. 1 of this year and every year after that the disbursement will be completed by July 1.”

The amount collected from the producers was based on the number of drilled, unconventional wells for the prior calendar year, according to Moury, and that “calculations are also based on a 15-year fee schedule in the law that is based on the average annual price of natural gas.”

Simply put, the impact fee for 2012 was $50,000 per horizontal well and $10,000 per vertical well, according to Moury.

“Through that process, we collected $204 million for 2012 to distribute to the state and local governments,” she said.

Of the $204 million, the law earmarks approximately $25.5 million to agencies to “offset the statewide impact of drilling,” according to Moury.

Those funds are distributed to various programs and departments, such as PennDOT, the PUC, county and state conservation districts, DEP, the Housing Affordability and Rehab Enforcement Fund, Natural Gas Energy Development, the Fish and Boat Commission, the Office of State Fire Commissioners and the Emergency Management Agency.

After those earmarks, the remaining 60 percent of the funds goes to counties and municipalities and the final 40 percent goes to “statewide initiatives with potential impacts and value,” according to Moury.

“Of that 60 percent, 36 percent goes to counties with wells, 37 percent goes municipalities with wells and the final 27 percent goes to municipalities in counties with wells,” Moury said, “Of that 27 percent, half is going to municipalities that host, are contiguous with or within five linear miles of wells, and the other half is distributed to all municipalities in the county.”

Moury also noted that the amount of the fee received by local governments will not exceed $500,000 or 50 percent, whichever amount is higher, of the total budget for the prior fiscal year for eligible municipalities.

With 2012 being the first year of the impact fee, the process was not without its bumps.

On Oct. 15, the PUC posted on its website the projected amounts of the impact fee that the local governments would be receiving, which totaled 1,455 checks for $117 million, according to Moury. Ten days later, the PUC received an inquiry from a municipality that led to the discovery of an error. Upon investigation, it was found that the five linear mile municipalities had not been included in the calculations, which affected the share of all the municipalities within affected counties.

This led to another problem, as it was found that the GPS data of some wells did not match the locations that were listed in the DEP’s database. To correct the problem, the DEP changed some of the locations to reflect the location of the actual well pad instead of where the well goes.

Moury added that the appropriate corrections have been made and the county checks were sent on Nov. 1 and the remaining checks for municipalities were to be mailed on Friday, Nov. 16.

She then went on to list the eligible uses of the impact fee, which includes the construction or repair of roadways, bridges and public infrastructure, as well as water, storm water and sewer systems. She also listed emergency preparedness and public safety, environmental programs, preservation and reclamation, tax reductions, projects to increase availability of housing, judicial services, career and technical centers and more.

Moury also noted that list of eligible uses was purposely written broadly to allow flexibility to local governments.

“The law provides no further guidance regarding the use of these funds,” she said, “and the PUC has no authority to advise local governments on the proper use of these funds.

“However, counties and municipalities receiving funds are required to annually report information to the PUC.”

Moury also said that more information can be found on the PUC’s website at www.puc.pa.gov.

The next speaker was Maureen Ball of Inergy Midstream LLC, a company that specializes in energy storage and transportation. Ball opened her presentation by explaining Inergy’s local efforts in the area of compressor stations.

“In 2011 we built the North South compressor stations,” she said, “one of which is located on the north side of Owego, N.Y., which is connected to the Millennium Line and the Central New York Oil and Gas’s (CNYOG) North Lateral Line.

“The other station is located in Wyalusing and is connected to Tennessee Gas Pipeline’s 300 Line and the Marc 1 Line, and is has 15,000 horsepower of electric-driven compression.”

Ball went on to say that there is another compressor station in Wyalusing that went in service during the summer and also a station in Muncy Valley that is expected to be in service soon.

She explained the process of constructing the pipeline and compressor stations needed for distribution before explaining how the process could benefit the community.

“Just last year in Pennsylvania, because of our projects, Inergy utilized over 250 Pennsylvania contractors, consultants and vendors, and we spent over $20 million last year utilizing these companies,” Ball said. “Additionally, our North East Regional Office in Sayre and our three natural gas compressor stations are located in Pennsylvania and contribute to the local tax base.”

The final speaker of the summit meeting was Russ Miller of Leatherstocking Gas Company (LGC). LGC is a natural gas provider that was formed as a joint venture between Corning Natural Gas Corporation and Mirabito Regulated Industries. The company has been focusing its efforts in Susquehanna County and Tioga County, N.Y.

“We are a local distribution company in Pennsylvania as of September 27,” Miller said. “LGC believes it can provide low-cost, clean-burning, locally produced natural gas to industries and residents in the region,”

He then spoke in detail how LGC has planned to do that.

“We started to think, ‘hey, we’ve got wells all around us, why can’t we just connect to them directly?’ So we started to do that,” he said. “Talisman came to us and said that they had all these wells in Tioga County, Jackson Township and Northern Pa. with no way to get the gas to market, so they asked if they could connect to us and for us to get our FERC (Federal Energy Regulatory Commission) for our Interstate Certificate, and we agreed.

“We literally have 75 feet (of pipeline) in the state of Pennsylvania,” Miller continued, “and we’re now directly connected to around 16 pads for a total of around 96 wells.

“In 2008, 32 percent of the gas that went through our Corning system was from Marcellus gas; in 2010, 64 percent of the gas came from Marcellus gas; and we’re projecting in 2012 to have 85 percent of the gas in our system to be from the Marcellus,” he added. “They found so much gas that we had to build a compressor station to get the gas to the interstate lines.”

Later in his presentation, Miller explained LGC’s future objectives, which included construction in Susquehanna County, more specifically Montrose, next year; Windsor County, N.Y. in 2014; and Sidney and Bainbridge, N.Y., in 2015.

“We want to provide lower cost, locally produced natural gas to people of northern Susquehanna County and local New York State communities off of the Constitution pipeline, entice new businesses and industries to locate near the Interstate 81 and Interstate 88 corridor and continue to grow our system,” he said.

Johnny Williams can be reached at (570) 265-1639; email: jwilliams@northeastdriller.com.